What this blockchain experiment in Bushwick means for RE investors
The company behind the deal, Meridio, believes “this is going to be a paradigm shift” for NYC’s housing market.
A run-of-the-mill three-story Bushwick rental is suddenly the poster child of innovation led by Brooklyn-based company, Meridio (formerly Pangea), which is trying to introduce blockchain technology to New York’s housing market.
The premise of Meridio’s disruption, backed by ConsenSys Media, is focused on how investors manage their ownership stakes. According to the New York Times, Meridio’s experiment involves introducing a cryptocurrency token for the eight current investors who own the Bushwick property at 304 Troutman Street; thanks to the underlying blockchain platform, an encrypted digital ledger of nearly instantaneous peer-to-peer transfers, the investors will then be able to sell, buy and document all aspects of their investment through the token.
“This is going to be a paradigm shift,” Meridio co-founder Mo Shaikh told the Times.
Not only will it make business speed up between existing investors looking to buy or sell, but the token will effectively fractionalize the property and create lower barriers for investors without major capital to invest, according to Natalia Karayaneva, whose company Propy is working on similar technology for the real estate industry in California and Vermont.
“If you don’t have the money to buy your house or apartment, you can buy a piece of it, allowing you to build wealth,” Shaikh explained to the Times. “That’s exciting for middle-class Americans.”
Meridio isn’t the first company to propose the idea of using cryptocurrency and blockchain to disrupt building ownership in the Big Apple. In March, a group of investors led by Shahal Khan of Chimera Group floated the idea of doing an Initial Coin Offering for a token that would then be used to buy a majority stake in the Plaza Hotel. (Chimera, alongside other investors including the Hakim Organization, went into contract to buy the hotel earlier this month for $600 million via traditional financing, as The Real Deal reported.)
Meanwhile, investors at the Bushwick property seem pleased thus far–trading of the 104 Troutman token will officially begin this summer.
“Real estate has been slow to adopt new technology, and this is bringing energy and excitement, which is welcome in a staid industry,” Cayuga Capital Management’s Jamie Wiseman told the Times. The developer and property manager holds a stake in the Troutman property as part of its larger portfolio, which is spread through Brooklyn and Queens.
That said, it wasn’t easy for Meridio to track down investors like Cayuga willing to use their properties as guinea pigs. The company partnered with Cushman & Wakefield to find willing investors and Meridio’s other co-founder, Corbin Page, told the Times that they went through “20 different conversations to find Cayuga, with executives who understood blockchain’s potential and were willing to act.” [NYT] — Erin Hudson